New study finds the financial service sector ripe for disruption and defines the type of consumers most attracted to disruptor brands and why.

Long established UK financial brands are feeling the pressure from their disruptive counterparts – new brands that are using technology to break the mould in terms of new business models or improved consumer processes. New research by Network Research provides evidence that the appeal of these disruptors crosses all industries and all consumer demographics.

Indeed, the research reveals that if disruptor brand owners and marketers only aim at the young and techie, they would be missing out on swathes of consumers open to new propositions and ways of doing things across all industries – even finance. What is more, the study reveals the type of consumers most drawn to brands like Crowdsource, and those who’d prefer to stick with the more traditional brands within the financial sector.

Virginia Monk, Network Research MD, adds “It’s becoming increasingly apparent that no company or business model is safe. Any current model can, and should, be replaced on an ongoing basis if it means creating value for the consumer. This research provides marketers with a wealth of information about where it is best to spend your marketing budget and the types of messages you want to get out there.”

The research was among a nationally representative sample of 1,500 adults aged 18+. It included a range of different sectors, from financial services to healthcare, utilities to holidays, and a selection of some of the UK’s long-established brands such as Thomson and Barclays alongside their newer, disruptive counterparts like Airbnb and Monzo.

Key findings include:

  • Overall, 7 in 10 are open to trying new brands.
  • A third of consumers would consider a disruptor brand in finance.
  • A third of Barclays’s customers fall within the top two population segments most open to disruptors, along with over half of John Lewis Finance customers.
  • Nearly 3 out of 4 people agree they are happy to manage their finances online, and this only drops slightly to 69% for those aged 65+.
  • Households with an annual income of over £55K were key adopters of disruptor brands, with 74% of them using these brands. But the top reason for choosing a disruptor brand is value for money, which isn’t all about price. Convenience and newness also play a role.

Consumer attitudinal segmentation

To identify those consumers most open to disruption, the study created a segmentation of disruptor users across both demographics and attitudes. To help brands better understand their consumers, the segmentation painted a picture of the consumers most drawn to brands like Revolut, PensionBee, TransferWise and Monzo, and those who are more likely to stick with established brands.

Slightly less than half of customers fall within the segments most open to disruptor brands. The segment most attracted to financial disruptors in particular are the ‘Go Getters’, who are the most tech driven and health conscious. This group has the highest number of 18-24 year olds, but still has 25-44 year olds who are heavy users of disruptor brands. They are most likely to be single and least likely to have kids. Given 25% of this group earns over £55K a year, it appears they have more disposable income and are a great target for new tech offers.

Disruptor adoption

The customers that are switching to disruptor brands say the top reason they switch is for value, followed by convenience, and then new and different. In the finance sector however, people are choosing brands such as Revolut, Monzo, PensionBee, and TransferWise not only because they provide better value for money, but also because they offer better digital solutions.

This is because around 65% of people agree that technology plays an essential role in their daily lives; a third of people said they would choose product and services they can manage on their mobile – and this increases to over half for those aged 18-44. Of these people, almost two-thirds say they like to try new things, and nearly 3 out of 4 people agree they are happy to manage their finances online – and this only drops slightly to 69% for those aged 65+.

To be converted, the key critical assurances people need are word of mouth and positive reviews.

One Monzo user said, “I have been recommended by many people to use these brands, I also know others who have used them and have never had any problems. I also wanted to try them as I had read good reviews about their services as well as them offering something new and exciting to the market.”

With Open Banking in its early stages, the threat of disruption in financial services is only set to grow. Disruptors such as Crowdsource and Revolut may not have been around for as long as Airbnb and Uber, but they’re already shaking things up in the finance world.

And from the consumer point of view, in services such as insurance, the precedent has been set through price comparison websites.

What does this mean for financial service brands?

Some brands, such as John Lewis Finance, are at a higher risk of disruption – over half of John Lewis’s customers sit in the segments open to disruption. Plus, wealthier people are more likely to gravitate to disruptors, and John Lewis customers are wealthier.

Both traditional and disruptor brands should be looking at the attitudinal segments to work out appropriate targeting for their customers. For example, when looking at the profile of Barclays by attitudinal segment, we can now see that over half of current users are in the two groups least likely to adopt disruptors. This compares to just 15% of Monzo customers. However, a third of Barclays’s customers fell within the two segments which are most open to disruptors. So, knowing this, Monzo can see the opportunity to steal Barclays’s customers from these segments. And Barclays can determine how to hold onto them.

The good news for traditional financial service brands is that only 4% of people are converted to disruptors because they’re not happy with their traditional providers. Another interesting figure comes into play around quality, where the perceived quality of disruptor brands, such as TransferWise, is either on a par with, or higher, than established brands like First Direct.

Whilst financial services are less prone to disruption than some sectors, some financial service product offerings, particularly insurance and currency, sit in sectors where brand and trust play a less important role, so are more open to disruption. Traditional brands can look to retain customers prone to disruption through understanding customer needs, and look to provide digital and convenient solutions. Financial service brands need to be providing digital solutions, apps and other online offerings. These digital solutions offer a customer experience that is convenient, easy to access, and straight forward. Most importantly, it’s a deep understanding of the consumer experience that will provide traditional brands the opportunity to stay one step ahead of the disruptors.

About Network Research

For the past 30 years independently owned Network Research has helped many of the UK’s best known companies build profitable relationships with customers.  There are 50+ head office staff based in London and offices in three locations: London, Bristol and Edinburgh. The company interviews over 1 million people a year – so are experts in understanding what customers think and how this impacts behaviour. Network Research is method neutral and every research programme is custom designed using in-house skills, including three call centres (with 170+ CATI stations) qualitative and quantitative experts, and online software.